Vince Cable said today of science funding: 'The question I have to address is can we achieve more with less?' Photograph: Nils Jorgensen /Rex Features

The blogosphere is abuzz with scientists complaining about the huge cuts that were said to be announced today. But the science community needs to look closely at what was actually said and urgently respond to ministers in those areas where the government appears to be getting it wrong.

Scale of spending cuts

"As a consequence [of the massive inherited budget deficit], we face the tightest spending round since post-War demobilisation. My department is the largest department in Whitehall without a protected budget and science, alongside further education and higher education, is one of its largest components. We know that the Labour government was planning deep cuts of 20-25% in the budget of that department. Economies on this scale are clearly a very major challenge."

My post this morning dealt with the possible scale of cuts in science spending that will emerge from the spending review. No figures have been announced but Cable said on the Today programme that talk of anything like 35% has been ruled out.

The economic case for science investment

"Over the next few weeks and months, major decisions will be made on government spending priorities as part of a wider move to stabilise the country's finances and rebalance the economy. They will help to define what we value as a nation and the direction in which we want to head. Investing in science and research is a critical part of that. I cannot prejudge the outcome but I know that my colleagues, including at the Treasury, value the contribution of UK science.

"I have been arguing for years my concern over the way the British economy was distorted. Money borrowed for property speculation rather than productive investment and innovation. Too many top performing graduates heading straight for high finance rather than science and engineering.

"It was clear to me and my colleagues that the British economy was becoming increasingly unbalanced in the short term, as the mountain of household debt built up. We were also unprepared for a long-term future where we need to earn our living in the world through high-tech, high-skills and innovation."

He goes on to say:

"There is a lot of evidence of the connection between innovation and economic performance. The 2010 OECD innovation report ... concluded that "governments must continue to invest in future sources of growth, such as education, infrastructure and research. Cutting back public investment in support of innovation may provide short-term fiscal relief, but will damage the foundations of long-term growth.

"Some countries are acting on that advice. The US is doubling basic science spend between 2006 and 2016. China has seen a 25% increase in central government funds to the science and technology sector. In Sweden, central government funds for R&D will increase by over 10% between 2009 and 2012. And in 2009, Germany announced it was injecting €18 billion into research and higher education during the coming decade."

This section of the speech endorses leading members of the science community who, having met with David Willetts and Cable, seem confident that the evidence of the economic benefit of science investment has been rammed down the throats of Treasury colleagues by ministers and officials at the Department for Business, Innovation and Skills (BIS). An assertive approach is necessary given the absence from the Treasury, alone of government departments, of a chief scientific adviser. It remains to be seen whether the Treasury accepts the corollary: that deep cuts to science spending are counterproductive, something it does accept when it comes to so-called "punitive" taxation, which serves only to lower tax receipts as a result of avoidance measures.

The Treasury may have retorted with the line in the speech, following those international comparisons, where Cable says:

"We in the UK are severely financially constrained."

But so are some of those countries he mentioned, and while we may be more constrained, that might be an argument for smaller increases in investment. It does not suggest that we must cut while some others are investing more.

"Outputs not inputs" ... "More from less"

"There is a school of thought which says that government commitment to science and technology is measured by how much money we spend. Money is important both for the quality and quantity. But it is an input, not an output, measure."

The "outputs not inputs" line is not new. Politicians tend to brag about inputs when increasing them (eg. NHS spending) and urge consideration of outputs when cutting inputs.

"The question I have to address is can we achieve more with less?"

To believe it is possible to get more good science from less funding is the political equivalent of a belief in cold fusion: an aspiration not supported by logic or reproducibility. Because of the way scientific funds are already allocated, as I set out below, there is very little room to identify wastage. It is far more likely that we would end up doing less for less. Even in an ideal world, if "useless" projects are identified, predicted and defunded, all you can get is the same from less, not more.

The real question is one for the government to address. Is there any evidence from anywhere that can be cited showing any changes to current funding allocations could reliably generate "more" from less? Even then it is not clear what the "more" is.

Is there likely to be undue interference from government in spending allocations?

"In deciding priorities, there is a limit to how much I can dictate the course of events. Nor do I wish to. Research priorities and technical priorities are set at arm's length from government, and through peer review. That is right. Yet the government spends £6bn a year supporting science and research and it is right that I should speak about strategic priorities."

This is entirely reasonable - it is public money. Government and parliament have a right to decide where broadly it is spent. This is not a breach of the Haldane Principle, although it is essential that any government directions to research councils are explicit and public, which was not the case with the last government in the STFC affair as the Science and Technology Select Committee has commented.

What is the role of economic impact?

Cable describes this as:

" ... a central question for the future of science and research in this country."

He goes on to defend "blue skies research" and reject a policy divide between pure and applied research:

"I fully accept that scientific enquiry, like the arts, has its own intrinsic merit. It is a public good. It helps to define the quality of our civilisation, and embeds logical scientific thinking into the decision-making of government, businesses and households. Superstition and irrational prejudice about the natural world are rarely far from the surface and scientists help inoculate society against them.

"The big scientific ideas that changed the world were often far removed from practical, let alone commercial, applications. Lord Sainsbury in his 2007 report described a high correlation between successful commercial spin-offs and high-quality fundamental research.

"So I regard the old debate about common room versus board room as tiresome and unproductive. We need a wide spectrum of research activity."

Across-the-board cuts - salami-slicing?

Rightly, he rejects this:

"The lazy, traditional way to make spending cuts is to shave a bit off everything: salami slicing. This produces less for less: a shrinkage of quantity and quality – I have no intention of going there."

Picking winners?

He is attracted by this but says that it should not be done by politicans (he might have added civil servants):

"Another approach superficially more attractive would be to specialise, to say there are certain branches of science and technology that we should do or not do. My response to this is two-fold.

"First, we should not politicise choices of this kind. Treasury and BIS ministers and officials, working under pressures of time as well as money, are not the people who should be making arbitrary, far-reaching decisions such as whether Britain should or should not 'do' nanotechnology or space research.

"Moreover, many of the suggested choices are not choices at all ... innovation depends on lateral thinking between apparently different disciplines."

But he goes on to say:

"There is however a strong case for identifying broad problems. For example, the challenges thrown up by an ageing population - the increased prevalence of Alzheimer's for example - need people working across biology, medicine, biochemistry and the social sciences in order to better address needs. So too for environmental challenges, such as providing clean water or alternative energy sources, pooling different disciplines to get a better understanding of low carbon."

And also:

"There is also a case for identifying and building up the areas where the UK truly is a world leader. This includes stem cells and regenerative medicine, plastic electronics, satellite communications, fuel cells, advanced manufacturing, composite materials and many more."

And I will award a prize to the first minister who – along with listing the winners – lists the proposed losers in discussions about sharing out the cake.

In any event, without developing further the point about picking strong areas, he moves on to what appears to be the most controversial section of the speech.

Screening out mediocrity ... Only funding the commercially useful or theoretically outstanding

"My preference is to ration research funding by excellence and back research teams of international quality – and screen out mediocrity – regardless of where they are and what they do.

"It is worth noting in the last RAE [Research Assessment Exercise] 54 per cent of submitted work was defined as world class and that is the area where funding should be concentrated.

"There is a separate but critically important question of how we maximise the contribution of government-supported research to wealth creation. I support, of course, top class 'blue skies' research, but there is no justification for taxpayers' money being used to support research which is neither commercially useful nor theoretically outstanding."

Dr Cable at least recognises that "rationing of this kind presents problems".

He asks:

"How do we allow room for new, unknown but bright people? How do we reduce, not increase, the time spent on applying for funding in a more competitive market?"

Those are the least of it. It is simply not possible to apply a retrospective analysis of university activity, the RAE – which is controversial enough in its metrics and allocation formula – to response mode funding of research council allocations. In such applications, where low success rates mean that many excellent or outstanding proposals are rejected anyway, what is most important is the proposed research rather than a judgment about the historic departmental record.

So unhappy has been the experience of the RAE that it was switched to a new approach (the Research Excellence Framework, REF) which was in turn delayed by the coalition government as a result of concerns about how economic benefit is measured.

The sentence that there is "no justification for taxpayers' money being used to support research which is neither commercially useful nor theoretically outstanding" is highly controversial and, ironically, hard to justify.

This is because it is hard to measure the theoretical breakthroughs let alone the commercial utility at the outset, and secondly because – as Cable says elsewhere in his speech – there is a false dichotomy between the theoretical and the commercial. In any event, the peer review system for all its faults certainly already does "screen out mediocrity".

What now?

Whatever the scale of the cuts is to be – and scientists are very worried about this – government policy on allocation needs to be more carefully thought out than currently appears to be the case. Otherwise salami-slicing will start to look relatively appealing.

The skills sector, further education and universities are all facing cuts in their BIS funding and they are doubtless at the door of the department on a daily basis. I have already urged the science community to fight for its funding, and that means engaging in debate with ministers on the key issues. We have a good argument to make.